Correlation Between Direxion Monthly and Ab Global
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Ab Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Direxion Monthly and Ab Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Monthly Nasdaq 100 and Ab Global Real, you can compare the effects of market volatilities on Direxion Monthly and Ab Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Direxion Monthly with a short position of Ab Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Ab Global.
Diversification Opportunities for Direxion Monthly and Ab Global
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and ARSYX is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and Ab Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Global Real and Direxion Monthly is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Direxion Monthly Nasdaq 100 are associated (or correlated) with Ab Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Global Real has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Ab Global go up and down completely randomly.
Pair Corralation between Direxion Monthly and Ab Global
Assuming the 90 days horizon Direxion Monthly Nasdaq 100 is expected to generate 2.24 times more return on investment than Ab Global. However, Direxion Monthly is 2.24 times more volatile than Ab Global Real. It trades about 0.07 of its potential returns per unit of risk. Ab Global Real is currently generating about -0.11 per unit of risk. If you would invest 8,722 in Direxion Monthly Nasdaq 100 on October 22, 2024 and sell it today you would earn a total of 688.00 from holding Direxion Monthly Nasdaq 100 or generate 7.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Direxion Monthly Nasdaq 100 vs. Ab Global Real
Performance |
Timeline |
Direxion Monthly Nasdaq |
Ab Global Real |
Direxion Monthly and Ab Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Monthly and Ab Global
The main advantage of trading using opposite Direxion Monthly and Ab Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Ab Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ab Global will offset losses from the drop in Ab Global's long position.Direxion Monthly vs. Direxion Monthly Sp | Direxion Monthly vs. Direxion Monthly Small | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Nasdaq 100 2x Strategy |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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